Questions of Interest

• How has the price volatility of aETH, rETH, and stETH compared to each other and native ETH?
• What percentage have each derivative deviated from the ETH peg?
• What are the trends in swapping activity among aETH, rETH, and stETH? Is there a correlation between swapping activity and the price of ETH?

All data will be from the past 90 days

What are ETH Liquid Staking Derivatives?

Ethereum has historically been a proof-of-work blockchain, with miners solving complex mathematical problems to validate transactions on the blockchain. The newer proof-of-stake mechanism, whereby users can stake their tokens to validate transactions and provide stability to the network, has numerous benefits over proof-of-work, such as far greater energy efficiency. However, staking on Ethereum is not very accessible to the average crypto enthusiast, as at least 32 ETH must be locked up to create a new validator. Liquid staking derivates make Ethereum staking much more user-friendly by allowing users to stake a small amount of ETH and withdraw it at any time. Stakers receive an ETH derivative token that represents their staked position and accrues rewards. This token can be swapped for other ERC-20 tokens.

Key Takeaways

• The prices of all three derivatives were closely pegged to the price of ETH over the past few months, although aETH had significant trouble maintaining its peg, falling to a low of 14% below the price of ETH on June 15th.
• rETh was the only derivative to have a higher price than ETH, generally ranging from 1-2% over the price of ETH, and only falling below ETH 3 days over the past 90.
• stETH has been the most popular derivative to swap for over the past few months, with millions of USD in swap volume each day.
• Swap volume for ETH derivatives peaked in mid-June of 2022, with nearly $120M in swaps on June 14th. It has since significantly decreased, with most days seeing between a few million to $20M in derivative swap volume.
• The net volume swapped for aETH reached a low on June 14th, where over $1M more aETH was sold than bought. Overall, over the past few months, far more aETH has been sold than bought, suggesting users are losing interest in the platform.

ETH Staking Protocols Overview

• stETH
  • stETH represents a staked position on Lido Finance.
  • Lido Finance currently holds over 90% of the ETH liquid staking market share.
• rETH
  • rETH represents a position on Rocketpool.
  • Rocketpool currently holds a little over 4% of the ETH liquid staking market share.
• aETH
  • aETH represents a staked position on Ankr.
  • Ankr allows users to stake various assets including AVAX, MATIC, and BNB.

Sources

Price Comparison

• The prices of all three derivatives, aETH, rETH, and stETH, correlated very closely with the price of ETH over the past few months.
• aETH maintained the lowest price out of the derivatives, while rETH held the highest price.
• aETH was always at least 2% below the price of ETH over the past 90 days, with a maximum deviation of over 14% below ETH price on June 15th.
• stETH was also consistently below the price of ETH, although maintained a closer ETH peg than aETH. stETH ranged from about 1.6% to over 6% below its ETH peg.
• The only derivative of the three to reach a higher price than ETh was rETH, which generally was around 1% - 2% above the price of ETH over the past 90 days.
• rETH only fell below the price of ETH on 3 days over the past 90 days, and reached a peak of just under 4% over the price of ETH.

Swap Comparison

• stETH has been by far the most popular derivative to swap for over the past few months, with millions of USD in swap volume each day.

• rETH has also seen significant swap volume, ranging from a few thousand to millions of USD each day. aETH, in comparison, has not seen a high amount of interest, with most days seeing less than $50,000 in swap volume.

• Swap volume for ETH derivatives peaked in mid-June of 2022, with nearly $120M in swaps on June 14th. It has since significantly decreased, with most days seeing between a few million to $20M in derivative swap volume.

• Interestingly, as the price of ETH increased over the past few months, derivative swap volume has decreased significantly from its high in mid-June.

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• The net volume swapped for aETH reached a low on June 14th, where over $1M more aETH was sold than bought. Overall, over the past few months, far more volume of aETH has been sold than bought, suggesting that users are losing interest in the token and either wish to use their ETH or stake it on one of the competing platforms.
• In comparison, rETH and stETH have seen relatively similar amounts sold and bought over the past few months, although stETH has seen greater outflows than rETH.